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05-10-2022, 04:55 AM
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#21
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Posts: 12,598
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So tired of clickbait about which generation is worst at X, Y, or Z. We all go through similar stages of learning how to deal with life, are tempted by different things at different times, etc.
When I first encountered "free credit" in my 30's, I almost turned it down because I thought there had to be some catch (well there is: you have to pay on time). But the terms were clear: Make your monthly payments and you'll pay no interest. Miss a payment, and gotcha!
Worked for me. We bought furniture and even some jewelry that way.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
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05-11-2022, 08:22 AM
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#22
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
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Quote:
Originally Posted by Koolau
IIRC personal credit card debt is a bit less than half the personal saving number (sorry, no source.) Of course, some folks have savings and CC debt, so there's that.
I have no idea what % of folks behave as ponyboy suggests and how many behave as MichaelB suggests. I DO know personally several folks that would suggest ponyboy may be more correct than not. My BFF that is $500K in debt at 77 is exhibit one. He has never been able to wait for gratification. I've often counseled him that simply saving up FIRST would actually allow him to own many MORE things since he would not have to pay interest (and might even earn a bit of interest.) He agreed, but never did it. YMMV
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Personal anecdotes may influence one’s views but hard data is critical, and quite useful. Federal Reserve data show US household balance sheets improved substantially from 2019 to 2021. As pandemic related economic concerns rose people reacted by decreasing consumption and increasing savings. Transfers from gov’t added to savings. See here https://www.federalreserve.gov/relea...e_sheet/chart/
According to the NY Fed quarterly survey on household dept, credit card balances declined in 1Q and are still below their peak in 2019. https://www.newyorkfed.org/medialibr...hdc_2022q1.pdf
Quote:
Balances
Mortgage balances shown on consumer credit reports increased by $250 billion during the first quarter of 2022 and stood at $11.18 trillion at the end of March. Balances on home equity lines of credit (HELOC) were relatively flat and have been for the past 3 quarters, bucking a declining trend in place since 2016Q4; the outstanding HELOC balance stands at $317 billion. Credit card balances declined by $15 billion, a typical seasonal change. Credit card balances had declined significantly in the first year of the pandemic and remain $86 billion lower than at the end of 2019. Auto loan balances increased by $11 billion in the first quarter. Student loan balances now stand at $1.59 trillion, and increased by $14 billion in the first quarter of 2022. In total, non-housing balances grew by $17 billion, boosted additionally by a $7 billion increase in other balances, which include consumer finance loans, retail cards, and unclassified loans.
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The household debt to GDP ratio has increased over its 2019 low, but still shows a consistent and substantial decline over the past 10 years https://fred.stlouisfed.org/series/HDTGPDUSQ163N
Anyone interested in more detail wil find a treasure trove of data at the different Federal Reserve Banks, and here is pretty good and easy to read analysis by Brookings Institute https://www.brookings.edu/research/b...es-since-2019/
The data show US household finances have been on a steady path of improvement since the GFC. Savings are healthy and increases in mortgage debt have been mostly taken in by households with high credit worthiness.
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05-11-2022, 08:52 AM
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#23
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2010
Posts: 5,862
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Those plans are worrisome.
Not just to Generation Z either.
Just take a look a the consumer credit numbers by demographic-specifically the 45-65 demographic. It is very revealing.
When we first got married every stick of furniture we had was either hand me down or second/third hand.
SIL got married at the same time. Everything brand new, purchased on consumer credit. Three years later they were bankrupt and blamed it on their credit card issuers and consumer finance loans. Go figure.
We retired at 58/59, financially independent. She is still working in her late sixties, operating two vehicles, and depends on reverse mortgage to remain in their home.
This is not a new story. Just a different way to hook people into the consumer credit trap.
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05-11-2022, 09:52 AM
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#24
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Posts: 12,598
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I find interesting the way some people will turn up their noses at anything not flashy and new (even if it's not the highest quality), while others will ooh and aah over good, older furniture and restored items.
It's as if having good taste can help determine your financial future.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
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05-11-2022, 10:51 AM
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#25
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Recycles dryer sheets
Join Date: Sep 2020
Posts: 93
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Quote:
Originally Posted by thefist
Quote:
Originally Posted by athena53 View Post
And these days I'm not sure where I'd be able to invest at 2 or 3% without some risk!
US Treasuries.
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The federal debt-to-revenue ratio is 7.6x, meaning it would take the government over 7 and a half years to pay off its existing debt, if 100% of revenue went to servicing the debt.
With that in mind, it's very debatable whether Treasuries are truly risk-free.
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05-11-2022, 03:56 PM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,809
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Quote:
Originally Posted by ZachTB
The federal debt-to-revenue ratio is 7.6x, meaning it would take the government over 7 and a half years to pay off its existing debt, if 100% of revenue went to servicing the debt.
With that in mind, it's very debatable whether Treasuries are truly risk-free.
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So BFF is actually in better shape than the gummint (except he can't print money.) His ratio is more like 6x. Of course, at age 77, he never really plans to pay it off - just like the gummint. I guess he learned from the experts.
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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05-11-2022, 06:27 PM
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#27
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Thinks s/he gets paid by the post
Join Date: Aug 2021
Location: Wofford Heights
Posts: 1,548
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Some people apparently think if you die in debt, you win.
The bigger debt, the better.
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05-12-2022, 12:56 AM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,809
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__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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06-06-2022, 11:47 AM
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#29
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Recycles dryer sheets
Join Date: Sep 2020
Posts: 93
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Oh my...thanks for sharing, Ko'olau! And I'm a big fan of the Law described in your sig
MC Rider - reminds me of the tagline on the book Die Broke by Stephen M. Pollan and Mark Levine, which read "The last check you write should be to the undertaker—and it should bounce!" That tagline was so inflammatory, I almost didn't read it! But fortunately, there was a lot more wisdom in that book than in the tagline and title.
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